Short Stays in Madrid – Just became a little longer

After months of debate, the regional government of Madrid has approved a strict regulation on short-term rentals, which could develop as a model for other cities.

The new decree, Decreto de Regulación de Apartamentos Turísticos y de las Viviendas de Uso Turístico, bans private homeowners for renting out their homes for less than five days. It also prevents owners from renting out their primary residence, a slap at the new “sharing” phenomenon spurred by sites like Airbnb.

The regulation, approved earlier this month, came after intensive lobbying from the hotel industry, which rejected an earlier proposal as too lenient.

“We have made a clear, simple and transparent rule that everyone knows the rules of the game,” Ana Isabel Marino, minister of jobs and tourism for Madrid, told reporters.

But the regulation was seen as a win for the hotel industry and attracted protests from apartment groups, who argue the regulations will simply drive owners to operate illegally.

This debate is raging in communities around Spain, as government agencies and hoteliers react to the rapid growth of the short term rental industry, thanks to sites like Airbnb and Homeaway, which make it easy for homeowners to find short term tenants. Earlier this month Catalonia fined Airbnb €30,000, alleging the site was facilitating illegal rentals.

Jurisdictions considering regulations will certainly take a close look at Madrid’s standard. Barcelona has imposed a ban on issuing new licenses while it considers guidelines.

The Madrid law spelled out very specific guidelines for tourist rentals, which will be grouped together in one class, unlike hotels. Holidays rentals must be furnished; provide heating, air conditioning and internet service; and provide tenants with a customer service phone number.

Every rental must also display a certificate of accreditation, cédula de habitabilidad, with clearly displayed rental rates.

Madrid will allow rentals in buildings where there are full-time residents, a divergence from proposals in Barcelona, which is discussing guidelines that would limit short term rentals to buildings completely dedicated to short term rentals. But tourist accommodations in Madrid will be defined as complete properties – not simply a room – and owners will have to register.

While government agencies say the new regulations are motivated by a need to collect taxes, address noise complaints, and create health and safety standards for holiday rentals, the hotel industry has been lobbying heavily for restrictions and standards, arguing it’s a question of “fair play”. The “amateur” landlords should have to meet the same standards as any professional accommodations, Manel Casals Saborit, general director of the Barcelona Hotels Associations, recently told the New York Times.

Ms. Marino defended the Madrid law, saying it creates fair competition between companies “in conditions of legal security and equality”. Rather than restrict the business, it creates clear guidelines for investors and homeowners to help facilitate the growth of the business, she argued at a press conference.

The new regulation will build the industry and spur the local economy, she argued.